ADVISORS CONTINUE SHIFT TO FEE-BASED MODELS

By Donna Mitchell

Advisors are turning to annuities, using tactical asset allocation and continuing to move to fee-based business models, as they cope with the effect that the sluggish economy is having on their practices, according to the latest Financial Professional Outlook from Russell Investments. About 45 percent of advisors are responding to decreased margins and increased investor risk aversion by moving transactional clients to fee-based accounts. That falls in line with a general industry shift toward fee-based accounts that began several years ago.

Given that some advisors had begun replacing lost business by shifting to transactional models, researchers were surprised that the move toward fee-based models sustained momentum during the market downturn.

According to the survey, 39 percent of advisors are selling more annuities, in a response to customer demand for guaranteed income products. Also, 26 percent of advisors are using new methods for prospecting for clients.

In terms of investment management, 85 percent of respondents said that they are using tactical asset allocation to diversify clients' portfolios, and 27 percent of them are using it extensively.

The investment research firm polled 348 financial advisors at brokerage firms, insurance companies and registered investment advisory firms this summer.

GOVERNMENT WORKERS UNPREPARED FOR RETIREMENT

Windsor, Conn. - A majority of state and local government workers are not certain if they have enough money set aside for their retirement, according to a new study by ING, which found that 61 percent of government employees surveyed said that they were unsure or uncomfortable about their ability to set aside enough for retirement. Forty-three percent have become less confident about their savings since the market downturn. Yet 72 percent of those surveyed have not changed the amount they are investing to address these concerns.

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